T HE federal deficit for 1984 is estimated to amount to a hun- dred and eighty-five billion dol- lars. This is one of those imagination- defying sums that cal1 out for illustra- tion, like the old-fashioned drawings that defined the length of ocean liners by picturing them upended next to the Woolworth Building. A deficit, which is a kind of negative quantity, is hard to depict as an ocean liner, so artists usually draw the national debt instead -the outstanding bonds and notes by which the present and past deficits have been financed. This is often shown as a great bag on the shoulders of John Q Public, or sometimes as a stack of dollar bills. Early in 1981, when President Reagan was much ex- ercised about the size of the debt, he said such a stack, made up of thou- sand -dollar bills, would be sixty-seven miles high. Today, one could add another stack labelled "Probable Ad- dition to the Debt During the Next Five Years." By the Administration's estimates, this second stack is already higher than the first. Such images help explain the pres- ent mood of alarm and concern about the deficit and the debt. A two-page "Bipartisan Budget Appeal" adver- tisement in the Times this May, orga- nized by five former Secretaries of the Treasury and a former Secretary of Commerce and signed by six hundred business, foundation, academic, and public figures, called on the President, the Presidential candidates, and Con- gress to take "major action" to reduce the federal deficits, warning that un- less this was done we Americans would be risking "the recovery, our economic future and our country." And it is not only national leaders who are worried about the deficit and the debt. In 1979, despite widespread sup- port for tax reductions, nearly two- thirds of those interviewed in a Gallup poll declared that they would willingly forgo a tax cut if that would help the federal government avoid incurring a larger deficit. Since most people are quick to admit that they find the whole issue of debts and deficits quite incom- prehensible, it seems probable that much of the public abhorrence of them stems from the thrall exerted by vast numbers. We might feel less alarmed about the current deficit if we were told that it was about five per cent of our annual output. Similarly, our R.EFLECTIONS THE DEFICIT national debt of one trillion five hundred billion dollars would lose a good deal of its paralyzing immensity if we were reminded that it, like ev- erything else, must be corrected for inflation. Our national debt today comes to about six thousand dollars per person; Robert Eisner and Paul Pieper have recently shown, in the American Economic Review, that our per-capita debt in 1946 was three times as large as that of 1980, in dol- lars of equivalent purchasing power. Despite the growth in the debt since 1980, the real per-capita debt today is still far below half that of 1946. Mainly, however, I think that the public's concern about the debt and the deficit arises from our tendency to pic- ture both in terms of a household's finances. We invoke Micawber's adage that happiness is the consequence of income exceeding outgo by sixpence, 47 and misery the consequence of things being the other way around; we see the government as a very large family suffering the latter consequence, and although we cannot exactly specify the symptoms of the misery, we all feel that the direction in which these deficits are driving us is one of house- hold bankruptcy on a globe-shaking scale. The problem here is not the thralldom of numbers but the miscom- prehensions that arise when imagery suitable for one set of problems and relationships is applied to another. Economists constantly have to do bat- tle with such misconceptions. Banks, for example-common sense to the contrary-are not warehouses stuffed with money but institutions that create purchasing power, of which ordinary currency constitutes only a small part. The stock market does not speak to us as an omniscient presence but serves as f' · 0 " I e "Trudy, I thznk you've done some significant gardening here."